Was embroidering used clothing taxable under the rule for alterations to new clothing, and when would the thread make the charge taxable?

Plain-English summary

The rule for alterations to new clothing did not apply to embroidery performed on used clothing.

Unless the embroidery was unusual—for example, converting clothing into a work of art—the work resembled repair and followed the repair rule. On the stated facts, none of the embroidery charge was taxable unless the retail value of the thread exceeded 10 percent of the total charge or the thread was separately charged.

When neither condition applied, the embroiderers were consumers of the thread rather than retailers of it.

Citations and references

• California Revenue and Taxation Code section 6006(b) (as cited)
• California Sales and Use Tax Regulations 1524(b) and 1546 (as cited)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/435-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/435-0755.pdf

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum
435.0755
Return Review Section
Attn: Nicole Gugger - Tax Representative

Elizabeth Abreu
Tax Counsel

S--- and L--- H--E--- F---

May 15, 1992

ATSS 324-8208
(916) 454-8208

SR – XX-XXXXXX

This is in response to your memorandum dated March 13, 1992. Pursuant to the Board's inquiry, the above-named taxpayers explained that their deduction on line 6 of their 1991 fiscal year return represented their charges for embroidering used clothing. You ask whether Regulation 1524(b), relating to alterations to new clothing, applies to these charges. Regulation 1524(b) addresses a particular application of Revenue and Taxation Code section 6006(b) which includes in the definition of sale the producing, fabricating, processing, etc. of tangible personal property for a consideration for consumers who furnish either directly or indirectly the materials used in the producing, fabricating, processing etc. This regulation only applies where new, not used, clothing is altered and therefore does not apply to this case. We believe that unless there is something unusual about the embroidery work (such as converting the clothing into a work of art), embroidering used clothing is similar to making repairs and that the repair rules under Regulation 1546 should apply. Unless the retail value of the thread was more than 10 percent of the total charges or the taxpayers separately charged for the thread (both of which are doubtful), none of the taxpayers' charges for embroidery work are taxable. Instead, the taxpayers are the consumers of the thread. If you have further questions, please call me at 324-8208.

EA:cl
4056E
cc: --- District Administrator